Victorian Government Shifts Focus To Defence

With $27B Worth of Defence Contracts Up For Grabs, Is the Victorian Government Giving Up On Manufacturing?

As Car Manufacturing leaves our state over he next few years and SPCA’s considering a similar decision, the Victorian Government has signalled towards defence as their focus for manufacturing. Defence is lucrative and not subject to the same market forces as food processing and automotive, however, how is the Government going to grow the industry with only winning tenders at the expense of South Australian defence firms and, what are they forecasting in terms of jobs and growth. The Liberals have traditionally spent money on defence and with an ageing infrastructure, some say there’s 50-100 years of work there, replacing that infrastructure.

Defence contracts are project based and hinged on Governments budgets. At a local level, there’s money up for grabs, at a global level, if Government support the defence industry and can capture an additional 5-10% of the defence contracts or work in conjunction with other contractors, the potential is massive, but, the Federal Government want the free market to decide, so I don’t think that is likely to occur and if it does, it’s a double standard to let one industry falter and assist another or award contracts.

Investing in manufacturing companies that provides goods to business and consumers is another ball game; In defence, you can’t create a next-generation innovative product, sell it to the mass market and become an overnight success, like you would in other manufacturing sectors. Defence needs to go through processes and be subject to political interests rather than the best solution winning tenders.

The Vic Government should always be vying for Vic based companies to win defence contracts not painting a positive picture on the industry because government policy has failed manufacturing.

Look at how the SPCA capital funding saga has progressed so far. SPCA want a one-off $50m in Government funding to upgrade their capital equipment. The Vic government has pledged $25m, the Federal Government has said it’s parent company, Coca-Cola Amitil has the cash, and won’t chip in the other $25m. The Victorian Opposition has pledged $30m if it wins the next election. If the State Government (In Power or Opposition) are really that concerned, the cash should be provided and negotiated conditionally, conditions that are in our interests.

It’s in our nations interests to keep businesses alive and people employed, not Coca-Cola. They can setup in a South-East Asian country, or get a hand-out from another government and make profit.

If 2,000 jobs go in Shepparton, those workers won’t be finding jobs anytime soon. If these workers are on the dole for 6 months, that’s around $13m of tax payers money the Federal Government would need to fork out in 6 months, so the investment now is really $12m. When you look at the etx revenue it would raise from income tax, company tax, flow on taxes from the $50m of capital expenditure and from what the orchards would generate, the injection of Government funding seems like a positive one. This analysis is very basic and if the proper analysis were done, I don’t see any reason other than principle not to invest.

The Liberal ‘Free Market’ argument doesn’t stack up when other Governments don’t follow the same stance and can manipulate the free market to suit their own interests. They want a free market, but Supermarkets have a duopoly, fuel prices are controlled and Electricity Network Transmission Providers have a monopoly in their regions they service.